The Federation of European Risk Management (FERMA) has called on the European Commission to create a resilience framework for catastrophic risks, in an effort to address the shortage of business interruption insurance without physical damage (NDBI).
FERMA says its resilience framework would have the flexibility to respond to a range of catastrophic events, such as pandemic and massive cyber-attacks, that can create severe business losses without physical damage.
“We now aim to deepen discussions with the EU, the Member States and the insurance sector, and to develop solutions for both short-term crisis management and long-term business resilience,” said FERMA President Dirk Wegener said.
“FERMA members have expertise and experience in the field of business interruption that we want to contribute to the future resilience of European business.”
The resilience framework proposed by FERMA would function on four levels:
Enterprise-level risk management: anticipation, prevention, identification and mitigation of risks; transfer of risk to private insurance and reinsurance markets, developing enhanced coverage for NDBI; National Member state pool guarantees; European Union support for, and coordination between national governments.
“This holistic approach supported by the insurance sector, national governments and EU institutions would ensure that the resilience framework has the capacity to benefit all businesses, from small and medium-sized enterprises facing immediate liquidity issues, to the largest transnational corporations concerned with supply chain and trade disruptions,” Wegener added
“A resilience framework will support the development of NDBI coverage to give European enterprises the financial security to maintain flexibility in the face of catastrophic events and incentives to apply risk management methodologies.”